The Anatomy of an Oversold Bounce Trade: Exploiting Fear in the Market (Winning TQQQ Trade)

Oversold Bounce and Exploiting Fear

Opportunity in the stock market often presents itself at the most difficult time to trade: during big market pullbacks after a big run up, when there is extreme fear in the market.

While good traders go into predatory mode and pounce on the clear market signals during this time, most traders lose there shirts because they either don’t know what to do or are in “panic mode”.

It is quite the conundrum to put on a trade like this when you are scared.

How do you over come the fear and make sound decisions?

By studying the market, having a plan based on your research, and executing without emotion.

Study the Market

I won’t go into much more detail other than showing you this chart going back to 2014. Notice that every big dip (October 2014, August 2015, January and July 2016) presented a major opportunity that only comes around once or twice a year.

These periods were by far the most profitable times to trade, but most traders lose their shirts during these times because most traders are in panic mode.

Scared trading leads to poor decisions.

A successful trader must take emotion out of the trade by coming up with a solid plan and executing without emotion.

Rubber Band or Oversold Bounce Plan

Here is a simple plan for exploiting fear in the markets when the market is tanking hard. We call this setup the oversold bounce or rubber band setup.

Think of a rubber band. The more it stretches, the farther the it will go once you let go. The same concept applies in the stock market.

  1. Put the market on watch once it gets extended. Use the eyeball test, past runs and overbought stochastic measures.
  2. Start to monitor the market closely once it is down 2-5%
  3. If the market continues to tank below these levels, look for a strong reversal candle off a surge in volume and volatility. This is usually the “max pain” day.
  4. Enter with limited risk and high upside. Do not bet the farm, but slowly add positions as the market clears resistance levels.

It’s a simple as this 4 step process.

This simple process has lead to some of my biggest wins over the past few years.

Winning TQQQ Trade

In today’s video I outline exactly how to trade this setup by analyzing my recent winning rubber band trade in TQQQ.  Trade Report members were alerted to this trade in real time.

You will learn how to:

  1. Overcome fear and make good decisions
  2. Identify overbought markets
  3. Put into practice the 4 step oversold bounce setup
  4. Analyze potential reversal trades
  5. Manage risk
  6. Plan for the secondary trade

Swing Trade Service

This swing trading service is great for those that work and can’t monitor the computer all day. We have in-depth nightly reports on the gameplan for the day/week and all stock picks that I trade will be alerted and emailed to you.

Check out the Swing Service HERE

Follow me, Paul Singh AKA “TheMarketSpeculator” on Twitter or email me at



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